China probes NVIDIA for alleged anti-monopoly law violations
What's the story
China's market regulator, the State Administration for Market Regulation (SAMR), has launched an investigation against US chipmaker NVIDIA.
The probe revolves around suspected violations of China's anti-monopoly law.
NVIDIA is also being investigated for possibly violating commitments made during the acquisition of Mellanox Technologies Ltd, according to the conditions laid down by SAMR in its 2020 conditional approval of the deal.
However, it did not provide details on how NVIDIA may have breached China's anti-monopoly laws.
Regulatory action
US curbs on China's semiconductor industry precede investigation
NVIDIA's shares dropped 2.2% in premarket trading following the Chinese regulator's announcement.
The investigation follows last week's US crackdown on China's semiconductor industry, marking the third such action in three years, which resulted in export restrictions to 140 firms, including chip equipment manufacturers.
While NVIDIA has experienced strong demand from China, this has been affected over the past year by US efforts to prevent China from acquiring the world's most advanced chips.
Scenario
NVIDIA faces strong competition from Huawei
Before the US curbs, NVIDIA controlled over 90% of China's AI chip market. However, it now faces growing competition from domestic players, notably Huawei.
When NVIDIA attempted to acquire Israeli chip designer Mellanox Technologies for $6.9 billion in 2019, there were concerns China might block the deal due to US-China trade tensions.
However, Beijing approved the acquisition in 2020, with several conditions for NVIDIA and the merged entity's operations in China.